401k Plan Advantages

401k plans offer many
opportunities to their contributors no matter whether they are regular
employees or self employed. Next follow several reasons why you should not put
off your participation in such a retirement plan.

Saving facilitation

You make monthly contributions from your salary. As a result you save
each month a particular amount which goes directly to your 401k account.

Contribution amount is up to you.

The IRS sets certain limits to the amount you can contribute. It is up
to you to decide how much you are willing and able to contribute to your 401k
account, but without exceeding the established limits.

Easy investing

The accumulated money in your 401k account is invested in mutual funds
which meet certain risk levels and which have been pre-selected by either you
or your employer. Investing in mutual funds greatly increase your chances of
higher profits.

Employer 401k contribution matching

Some employers provide a 100% matching, which is a dollar-to-dollar
matching. Though most employers match only 50% of the contributions of their
employees, this is still an instant 50% growth guaranteed.

However, some employers set limits to the proportion of the employees'
contribution that they will match. This means that even if you contribute 10%
of your salary, your employer may match only a certain percentage.

Tax advantages of 401k plans

Only after you withdraw money from your retirement plan account you are
liable to taxes on your retirement plan earnings. Since at the time you decide
to withdraw your money (probably retirement age) you will be at a lower tax
bracket, you will greatly save from taxes.

Furthermore, the contributions you make are before any tax deductions.
This means that by making as larger contributions as possible you may fall in a
lower tax bracket.

The money you have in your 401k plan can be rolled over to your new
employer in case you quit your current job. Take advantage of this opportunity
in order to save from taxes.

Hopefully, we have
managed to persuade you that 401k plan is a very reasonable investment. These
are only a few of the reasons to choose a 401k plan investment. For more
information on the topic visit the other articles available on our website.